If you are married and file a joint tax return, your federal tax rate may be lower than that of an unmarried individual. In fact, many areas of U.S. tax law are written to provide married couples with greater benefits than those received by other individuals - the same is true for retirement plans, which offer several perks for those who have tied the knot. In this article, we highlight some of the unique benefits available to married couples.

Using Your Spouse\'s Income To Fund Your IRA
One of the eligibility requirements for making a contribution to an IRA is that you must have taxable compensation. However, an exception is made for a married individual who files a joint tax return if his or her spouse has taxable compensation. For this purpose, the spouse who has taxable compensation is allowed to make a spousal IRA contribution to the IRA of the spouse who has no taxable compensation, commonly known as the non-working spouse.

SEE: Making Spousal IRA Contributions.

Inheriting Your Spouse\'s Retirement Benefits
A retirement account owner can generally designate any party as the beneficiary of his or her retirement account. However, in certain cases, if the account owner is married, his or her spouse must consent to the designation if the spouse is not the sole primary beneficiary of the retirement account. This ensures that your spouse does not designate someone else to receive death benefits from his or her retirement accounts without your approval. Such spousal protection is offered for the following types of retirement accounts:

Qualified Plans
If your spouse has assets in a qualified plan account, he or she is required to designate you as the sole primary beneficiary. Plan administrators will generally not accept beneficiary designations unless the spouse is the sole primary beneficiary or consents to an alternate designation, and the consent must be witnessed by a notary public or a plan representative.

IRAs for Residents of Community/Marital PropertyStates
If an IRA owner lives in a community or marital property state, spousal consent is generally required if the IRA owner designates any party other than his or her spouse as the primary beneficiary of the IRA. Community property states are Alaska (residents may elect to have their property treated as such), Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas and Washington; Wisconsin is the only marital property state.


  • Community property is generally defined as property acquired during the marriage.
  • If you reside in a community property state and you plan on getting married and do not want to designate your new spouse as the beneficiary of your pre-marriage IRA, you may want to keep your pre-marriage and post-marriage IRA assets separate.
  • Inherited IRAs are usually not defined as community property, and spousal consent may not be required to designate someone other than your spouse as primary beneficiary.

If you need to know whether any of the rules mentioned in these notes apply to your state, check with a local tax attorney.

Prevention of Distributions without Spousal Consent
Quite often, retirement plan participants deplete their retirement assets without the knowledge of their spouses. This can be a devastating revelation to a spouse who was counting on those funds to finance the couple\'s retirement years. If the assets are in a defined-benefit, target-benefit or money-purchase pension plan, depletion of those assets is unlikely to occur without the spouse\'s knowledge, because they are generally required to be distributed in the form of a qualified joint and survivor annuity (QJSA), unless the participant and the spouse consent in writing to receive distributions in another form.

Exceptions apply to assets that are required to be distributed from the plan, including excess contributions, required minimum distributions and amounts that can be cashed out without the participant\'s consent. In most cases, amounts can be cashed out without the participant\'s consent if his or her accrued balance under the plan is $5,000 or less.

While the QJSA rules always apply to all defined-benefit, target-benefit and money-purchase pension plans, this is not the case for profit-sharing and 401(k) plans. Instead, the QJSA rules apply to these plans only if the plan is designed to include those options. Some profit-sharing and 401(k) plan documents, such as prototypes, are designed to allow employers to elect whether they want the plan to be subject to the QJSA rules.

Treating Inherited Assets as Your Own
If you inherit retirement plan assets, your options for distributing the assets are generally as follows:

If the retirement account owner dies before the required beginning date (RBD):

  • Distribute the assets over your life expectancy. (Note: If there are multiple beneficiaries for the retirement account, the life expectancy of the oldest beneficiary is used, unless the assets are split into separate accounts by December 31 of the year following the year the owner dies. If the split occurs by then, each beneficiary may use his or her own life expectancy.) Distributions must begin by December 31 of the year following the year the retirement account owner dies.
  • Distribute the assets based on the five-year rule.
  • Accelerate distributions for either of the above up to distributing the entire balance in a lump-sum payment.

If the retirement account owner dies on or after the RBD:

  • Distribute the assets over your life expectancy or the life expectancy of the decedent, whichever is longer.
  • Accelerate distributions up to distributing the entire balance in a lump-sum payment.

If you are the deceased retirement account owner\'s spousal beneficiary, the options explained above are available to you, but you also have the following options:

If the retirement account owner dies before the RBD:

    • If you elect to distribute the assets over your life expectancy, you need not begin distributions until the year the decedent would have reached age 70.5, had he or she lived.
    • You can roll over the amount to your own IRA or other eligible retirement plan and need not begin distributions until you reach age 70.5. In this case, distributions would be based on the uniform life table, which assumes that you have a beneficiary not more than 10 years your junior, or the joint life expectancy table if you remarry someone more than 10 years younger than you are. (You can find these life expectancy tables in IRS Publication 590.)

If the retirement account owner dies on or after the RBD:

  • You can roll over the amount to your own IRA or other eligible retirement plan and need not begin distributions until you reach age 70.5. Similar to above, you would be able to use the uniform or joint table to calculate your RMD amounts.

SEE: Inherited Retirement Plan Assets - Part 1 and Part 2.

Most of the benefits discussed in this article are meant to protect spouses, including those who do not have regular jobs but provide other forms of family support while the other spouse works at an income-producing job. If you are unemployed and want to fund your IRA, consider using your spouse\'s income as your taxable compensation. Also, if you are a qualified plan participant or an IRA owner, check with your plan administrator to determine whether you need to obtain the consent of your spouse for distributions and loans. Also check with your IRA custodian to determine whether you need your spouse\'s consent if you decide to designate someone else as the primary beneficiary of your IRA.

Related Articles
  1. Budgeting

    Marriage: For Richer Or Poorer?

    Marriage can be like doubling an income, as long as you avoid doubling these expenses.
  2. Retirement

    Tax Breaks For Canadian Families

    Canadians have a lot of advantages when it comes to family tax perks.
  3. Retirement

    Why You Shouldn't Let Your Partner Do The Books

    One person often deals with the finances in a relationship, but being ignorant has a cost.
  4. Taxes

    The 5 Countries Without Income Taxes

    Discover information on some of the best countries to consider relocating to that offer the financial benefit of charging no income tax.
  5. Professionals

    Is Delaying Social Security Until 70 a Good Idea?

    Soon to be retirees are often told it's best to wait until age 70 to collect Social Security. Here's why this is not always the best advice.
  6. Professionals

    Top Tips for Maximizing Social Security

    Between delaying filing, claiming strategies and taking advantage of special marital benefits, there are several ways to maximize Social Security.
  7. Retirement

    The Better Way to Save: Life Insurance or IRA?

    Sure, you can tap your permanent life insurance policy to help fund your retirement. But in most cases, an IRA is the better choice. Here's why.
  8. Options & Futures

    Pick 401(k) Assets Like A Pro

    Professionals choose the options available to you in your plan, making your decisions easier.
  9. Investing Basics

    5 Things To Ask Before Hiring A Financial Advisor

    Choosing a financial advisor isn't an easy task. Here's a list of the most important things to consider when planning for your financial future.
  10. Personal Finance

    Common Estate Planning Mistakes

    Estate planning requires careful consideration over the course of years.
  1. Can I put my IRA in a trust?

    You cannot put your IRA in a trust while you are living. You can, however, name a trust as the beneficiary of your IRA and ... Read Full Answer >>
  2. Why is the Cayman Islands considered a tax haven?

    The Cayman Islands is one of the most well-known tax havens in the world. Unlike most countries, the Cayman Islands does ... Read Full Answer >>
  3. Why is Luxembourg considered a tax haven?

    Luxembourg has been the tax haven of choice for many corporations and mega-rich individuals around the world since the 197 ... Read Full Answer >>
  4. What are the risks of rolling my 401(k) into an annuity?

    Though the appeal of having guaranteed income after retirement is undeniable, there are actually a number of risks to consider ... Read Full Answer >>
  5. Why is Panama considered a tax haven?

    The Republic of Panama is considered one of the most well-established pure tax havens in the Caribbean due to extensive legislation ... Read Full Answer >>
  6. Why is Andorra considered a tax haven?

    Andorra is one of many locations around the globe considered a tax haven because of its relatively lenient tax laws. However, ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!